Untitled Flashcards Set

Demand – The desire, ability, and willingness to buy a good or service.

Microeconomics – The study of individual consumers and businesses in an economy.

Demand Schedule – A table showing the quantity of a good consumers are willing to buy at different prices.

Demand Curve – A graphical representation of the demand schedule, showing the inverse relationship between price and quantity demanded.

Law of Demand – As the price of a good increases, the quantity demanded decreases, and vice versa.

Market Demand Curve – A demand curve that shows the total quantity demanded by all consumers at various prices.

Marginal Utility – The additional satisfaction gained from consuming one more unit of a good.

Diminishing Marginal Utility – The principle that as more of a good is consumed, the additional satisfaction gained decreases.

Change in Quantity Demanded – A movement along the demand curve due to a change in price.

Income Effect – When a price drop increases consumers' purchasing power, leading them to buy more.

Substitution Effect – When a price increase causes consumers to replace a good with a cheaper alternative.

Change in Demand – When factors other than price (like income or preferences) shift the entire demand curve.

Consumer Income – The amount of money consumers earn, affecting their purchasing power.

Consumer Tastes – Preferences and trends that influence how much of a good people buy.

Substitutes – Goods that can replace each other (e.g., Coke and Pepsi).

Complements – Goods that are used together (e.g., peanut butter and jelly).

Consumer Expectations – What consumers anticipate about future prices, income, or product availability, affecting demand.

Number of Consumers – The total number of buyers in a market, influencing demand levels.

Elasticity – A measure of how much quantity demanded changes in response to a price change.

Elastic Demand – Demand that changes significantly with a small price change (luxuries, non-essentials).

Inelastic Demand – Demand that changes little with a price change (necessities, few substitutes).

Unit Elastic Demand – A situation where a price change leads to a proportional change in quantity demanded.

Total Expenditures Test – A method to determine elasticity by multiplying price and quantity demanded (if total revenue moves in the opposite direction of price, demand is elastic).